ike most business leaders, software executives tend to fixate on growing their revenues. Maybe even more than most since, in the software world, positive momentum can be the essential fuel for everything from sales to recruiting.
So less-than-desired revenue is a serious problem for software execs and their investors. And identifying the root causes of any shortfall is an immediate priority.
Does your product lack key features? Are your salespeople not effective? Are there not enough leads from Marketing?
Here’s another possibility, one that can have a larger impact on revenue than any other variable under management control:
Is your Pricing holding you back?
Based on our work with hundreds of B2B software companies, we’ve observed how frequently Pricing’s impact is misunderstood, undervalued, or even overlooked. And how software companies that properly consider their Pricing can significantly improve revenue performance and profitability.
It’s About Software Monetization, not Just Pricing
Fundamentally, software pricing involves more than just the actual “price”. As tempting as it may be to raise prices to generate more revenue or lower prices to win more customers, the price charged for your software is but one element of a coordinated Monetization Model.
An effective software Monetization Model addresses three parts:
- Licensing: How your products are licensed, what’s included, payment terms and timing
- Packaging: How products, features and services are configured and offered to customers
- Pricing: How the product is priced, including parameters for discounting
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